Reduce Taxes On High Ordinary Income
If you earn a high income, you have few options when it comes to reducing taxable income.
Once income reaches the top federal brackets, starting at 35%, the impact is clear. Add Medicare surtaxes and state income taxes, and total rates can climb to 40 to 50%.
Most strategies come with trade-offs. Some require active involvement, like real estate. Others carry higher risk or offer only a one-time benefit.
This strategy is designed to work differently.
It offers the potential to generate significant ordinary deductions in a structured and repeatable way, using capital efficiently to create a clear tax impact without committing large amounts of money.
How QFAF Works
- The fund meets IRS criteria to be a “trader” business.
- The fund’s expenses now flow through as business expenses (i.e. a tax deduction).
- Investments within the fund generate a mix of short term capital gains and ordinary losses.
- An adjacent strategy is employed to generate short-term capital losses.
The capital losses from the adjacent strategy offset the capital gains from the fund, leaving investors with ordinary losses used to offset ordinary income.
Is QFAF Right for You?
Because of its complexity and structure, this strategy is appropriate for investors who work closely with a financial advisor and a CPA.
In addition, eligible investors will need to have:
- Qualified Purchaser status (typically with a $5M+ net worth)
- Taxable investment capital of at least $10M+
- Annual income of $500K+
The minimum is flexible based on the desired amount of tax alpha.
QFAF Strategy Characteristics
Designed to minimize exposure to broad market movements
Strategy built to deliver significant tax savings for investors
No operational involvement required—no property management, business ownership, or active participation.
Structured to generate meaningful tax deductions through a specialized IRS-recognized framework.
Designed to produce consistent tax benefits year over year, not just a one-time deduction.
Returns driven by relative pricing inefficiencies—not dependent on overall market direction.